The issue with loot boxes is that people feel ripped off by them, particularly after having already spent $60 for a big named video game title. If you spend $60 to buy a game, the implicit nature of that already hefty price tag is that it covers everything needed to play and win the base game without any additional payments. Any additional downloadable content (DLC) that appears later has a separate price tag. We understand this aspect of DLC. You can buy DLC if you want, but it’s not necessary to pay for DLC to win the base game. DLC is a tried-and-true model and it works to extend the gaming experience, but is not necessary to win the base game. Not everyone likes DLC, but as long as the DLC is created as separate world components, it’s fine.

When loot boxes were introduced, you might end up spending another $60 in addition to the already spent $60 to for the random chance to gain rare weapons or armor or level-ups that are not available in any other way and which are required to progress in the game.

The argument by game developers is that these pay add-ons are not strictly necessary. It depends on how you interpret that statement. It may not be strictly necessary to play the game, but it may make the game experience less enjoyable and possibly even problematic. If you plop down for the loot in the loot boxes, then your experience becomes much easier and better. Loot boxes turn games into a pay-to-win model.

Pay-to-win games to me are not fun. There’s no challenge in plopping down $5 here and $5 there just to get past a level or a boss or whatever it is holding you back. The challenge is and should be in the base game, not in buying add-ons needed to win. If the add-ons become the game, then the base $60 you paid is seen as a rip-off.

Smart Phone Games

Pay-to-win games have been available on the smart phone market for years and that’s fine. These games are typically free to download and free to play to a point. You only run into pay-walls when you want to progress beyond certain points or to buy more lives. Again, most phone game apps are designed around a pay-to-win model. However, there’s no challenge in paying to win a game. Paying to win only depends on how much money you are willing to spend. It’s just a money making scheme.

In the free download app model, you’re not paying an initial $60 to download the game. You’re paying nothing. This means there’s no base expectations set. So then each micro-transaction does help cover the developer costs of producing that free game. In the AAA $60 game arena, you’ve already paid for the development costs and you expect a fully functioning game in return for that $60. That’s the expectation of paying $60.

For example, adding loot boxes to Star Wars Battlefront II was simply a money grab by EA and nothing more. Everyone expected this loot to drop as a result of completing levels. No one expected that you’d have to pay to buy level up cards in addition to the already spent $60… cards that you might not see for many, many hours of play if they ever drop at all. Cards that are needed to unlock key pieces of the game.

Rethinking this Model

Fundamentally, game producers need to think long and hard about the pay-to-win model. Personally, I don’t like it and I will never be a fan of pay-to-win. You pay for the game itself, not for the ability to win it. You should win the game or not on your own skill as a game player. For a $60 price tag, the game should drop all necessary loot or, if absolutely necessary, offer some kind of in-game credit system that you can spend towards the loot crates as you progress. Many games do give in-game credit that are awarded at level’s end that can be used towards ‘buying’ loot. You can also spend real money to buy those same credits in a store. This gives you two ways to ‘buy’ loot in the world. You can play the game and win credit or you can pay for it. The difficulty is when the game only drops the tiniest amount of credit within the game and then expects you to make up the difference with real money. Again, pay-to-win and I am so not a fan of this.

If you’ve already paid $60 to buy the game at the store, then don’t throw down real money loot boxes in front of the gamer and expect people to open their wallets and be happy about it. Real cash microtransaction loot boxes, again, turn the game into a pay-to-win model.

The argument here is that loot box costs offset the already expensive price tag of video game production. I counter argue that if a game now costs $80 or $100 or $120 per copy to develop, then simply raise the price of the game in the store accordingly and leave out the unnecessary loot boxes. No one says that a developer must sell a game at $60. They can price it at whatever they need to recoup their costs. If they can’t recoup their costs of a game at a $60 price tag, then perhaps they shouldn’t be in the video game business. Or, perhaps they should have kept to a lower budget production. However, they are also free to raise the price of their game of they want to build bigger, flashier and more expensive games.

Other Alternative Systems

Let’s take a page from the toys-to-life games area. If developers want to offer a level-up swag system for the game, then do it through physical trading cards you can buy at Target or Walmart. Then, use a code on the card to load the card into an app linked to the game. This then gives you legitimate reasons to go buy the cards at the store. It also means anyone can go buy these cards to enhance their game experience… and you’re getting actual collectible trading cards for your money.

It also means the retailer can put the cards on sale and offer discounts on them. Digital cards coming from loot boxes purchased in-game are a waste that can only be used once and have no value after the game ends. It’s just money lost in addition to whatever you paid for in the game itself. Physical trading cards hold their value long after a game becomes a fond memory running on a Raspberry Pi emulator years later. It also means you can trade or sell these cards to others who might value them and at least recoup some of the money spent towards the game. Some of the cards might even become extremely valuable. A video game copy will never have that value.

Having cards produced into 5 or 8 card blind packets means the consumer gets to discover what cards they got and they can trade them with their friends if they get duplicates. It’s a real world way of adding value to the game and a shareable component, but at the same time offers a real world tangible component. Having these cards should also not be necessary to win the game, but they can be used to gain access to weapons, armor and character stats that might otherwise take a lot of grinding to obtain. All physical cards sold in blind packs should be discoverable in the game itself. But, they may contain exclusives that aren’t necessary, but add fun value to the game.

I’m a much bigger fan of using add-ons like real world trading cards than using in-game digital loot boxes… as long as these items are not needed to win the game. Pay-to-win needs to stop in general and these pay-to-win systems definitely have no place in a game sold at $60.

Are Loot Boxes a form of Gambling?

Here’s where some people feel that there’s a problem with loot boxes within video games. If you pay real USD to purchase a loot box, then you’re paying for the ‘chance to win’ something rare. In fact, when you pay for a loot box at all, it can be seen as a form of gambling strictly because of the ‘chance to win’ aspect. If the loot boxes drop on their own for free, there’s still a chance to ‘win’ something rare, but you’ve paid nothing for it and this would not fall under gambling. Gambling is when you pay money for a chance to win.

The paying of real USD to ‘win’ in-game loot is THE bone of contention and is the part in all of this that is seen as a form of gambling. Paying money to win anything is technically a form of gambling. It could also be considered a form of a lottery, much like a scratch card. Because lotteries are considered illegal unless operated by official state organizations, placing an illegal lottery into a video game could result in legal problems for video game producers. As a result, many people view for-pay in-game loot boxes as a form of gambling and in need of regulation under US gambling laws. Because gambling, at least in the US, is only allowed by persons 21 years of age or older, placing pay-to-win ideas into a video game designed to target minors and underage persons could be a problem for the video game industry. It also means the game should, at the bare minimum, put an M rating on any game that includes this mechanism.

These games could also be considered a form of early conditioning designed to teach children about gambling early and get them addicted to its risk-reward system. Because many video game companies also hold stakes in gambling operations, such as producing gambling machines for Las Vegas or actually own stakes in casinos, loot boxes could become very problematic for video game companies.

On the other hand, gambling usually entails winning money, not prizes. In Vegas, you pay to win money. At Dave and Busters, you pay to win prizes. So far, playing games to win tickets at an arcade has not fallen under gambling laws. However, you’re winning tickets, not prizes. The only random chance involved is how many tickets you win. In an arcade, simply playing the game is guaranteed to give you at least one ticket, usually more. The tickets are then redeemed for prizes of your choice. It’s not exactly a random chance kind of thing like a loot box. In addition, arcades use the payment given towards playing a game of skill which then gives you tickets. Giving tickets after playing a skill game that you can redeem is not exactly like paying for a loot box in a game with random chance to win its contents. Loot boxes are much more like a slot machine or lottery scratch card than they are like Dave and Busters skill-game ticket model.

I’m hoping that the FTC will find that any payment of real money towards ‘winning’ in-game loot is ruled as a form of gambling. This would mean that instead of paying for blind random chance boxes, that video game producers would have to set up a store and sell you exact items needed in the game. No ‘random chance to win’ involved. Either that or they must continue to drop the loot boxes in-game at no cost. Better, don’t drop loot boxes at all. Just create a store and sell us the the things we need… that, or use the suggested trading card system sold separately outside of the game.

If the FTC rules that the loot box is considered an illegal form of lottery, this mechanism could no longer be added to video games. I’d be fine with that outcome too.